FTX, Gensler’s Redux, and the Recovery of Its Role in the Cryptoempirical Space: A Witness to the Lehman Moment

Gary Gensler, head of the US Securities and Exchange Commission, said on CNBC Thursday that while the crypto space is regulated, investors “need better protection.” According to The Wall Street Journal, the SEC and the Justice Department are looking into FTX. The Department of Justice did not say anything.

Some industry insiders have said the company’s downfall had triggered a “Lehman moment,” referring to the 2008 collapse of the investment bank that sent shockwaves around the world.

“This was one of the most trusted entities in the crypto space, so it will take some time to recover,” said Jay Jog, co-founder of the blockchain startup Sei Labs, which is based in California.

The company was valued at $32 billion in its latest funding round, and had recruited high-profile backers including SoftBank, Tiger Global, Singapore’s Temasek, as well as celebrities like Tom Brady, Gisele Bündchen and Naomi Osaka. The arena in Miami where the Heat play is named after it.

The situation is still developing quickly. But one concern is how it could ripple throughout the entire crypto sector, which was worth more than $1 trillion in August.

During the summer, Bankman-Fried put up $1 billion to bail out companies and shore up assets to keep the entire industry afloat. Few white knight are left to save FTX and others.

“The number of entities with stronger balance sheets able to rescue those with low capital and high leverage is shrinking within the crypto ecosystem,” strategists at JPMorgan said in a note to clients this week.

Traditional investors have also been burned, but are reassuring clients they can handle it. The Ontario Teachers Pension Plan stated that there would be no significant impact on its portfolio, even though its stake is less than 1% of total assets.

Do Cryptocurrencies Go All-In on Bitcoin? The Case of David Fok, the CEO of Binance and the Bankman-Fried Digital Currency

Changpeng Zhao, the CEO of Binance, tweeted that he had been texting with Nayib Bukele, the president of El Salvador, which has gone all in on bitcoin. There was no business or exchange with us, and we don’t have anycryptocurrencies in FTX. It was good to thank God.

More pain could arrive as investors pull their funds fromCRYPTO. The company believes that the price of the digital currency could fall 22% from where it is now. Fok said that the digital coin could go under $10,000, an all time low.

The current climate makes the “crypto winter” more likely as fears about the economy continue to undermine the appetite for risky assets.

In the near term, this is going to be a big problem for the industry. But he doesn’t think it will “end things” entirely, and is hopeful that it could bolster interest in his business, which focuses on building more transparent, decentralized crypto exchanges.

“It reinforces the view that any sort of financial enterprise needs extensive regulation,” said James Malcolm, head of foreign exchange strategy and crypto research at UBS. The world will look better by the year 2024.

“We’ve been set back a few years,” he said. “Regulators rightfully will scrutinize this industry much, much harder, which is probably a good thing, to be honest.”

David learns that FTX is a safe and easy way to invest in the world’s most used digital currency. David said, “I don’t think so.” I have never been wrong about this stuff.

Rival Binance had said it would explore an FTX bailout earlier this week but almost immediately backtracked after the company said FTX was essentially beyond saving.

Sam Bankman- Fried has resigned as CEO while the company files for Chapter 11 in the United States. Seamus Hughes pointed out that the bankruptcy filing itself is now available (pdf), and it lists a total of 134 corporate entities included in today’s announcement, as well as the proposed appointment of crypto investor Stephen Neal as chairman of the board for FTX and Alameda.

For the crypto industry, the lesson here is to stop looking for saviors. Bankman-Fried’s meteoric rise was not simply based on his own doing – he was buoyed by many others. He raised millions of dollars, he was showered with media attention, and most importantly he wasn’t questioned much. There is much hope and responsibility that should not be focused on one person. It is against everything that the company is supposed to represent.

Bankman- Fried is a follower ofeffectiveAltruism and he has tried to make as much money as possible in order to give it away. But the fate of his philanthropic endeavors is now in doubt.

Samuel, who asked not to be referred to by his full name in order to preserve his anonymity, states that he lives somewhere in Southeast Asia but is between jobs and money is hard to come by. His nest egg was in his FTX account.

Samuel’s portfolio is made up predominantly of a cryptocurrency called XRP, the price of which is thought to have been depressed by an ongoing lawsuit between its issuer, Ripple Labs, and the US Securities and Exchange Commission. Samuel was waiting for a favorable ruling to send the price of the coin skyward, and he was hoping that it would happen. But now, with his tokens locked up in FTX, he won’t be able to reap the rewards for his patience. “I could see the finish line, but this latest drama has me hanged by the balls,” he says. “It’s just so much hardship.”

FTX customers have stories like this one. One FTX trader, who asked to remain anonymous, was in the US when they first heard of trouble at the exchange, which meant it was not possible to immediately withdraw their funds (FTX International, not to be confused with FTX US, is unavailable in the country.) FTX trader discovered that their withdrawal password needed to be reset after using a virtual private network to circumvent the restrictions, as this would stop money from being taken out of their account. By that time, it was already too late.

However, Neal will not be taking over. He can’t serve in that position for various reasons, including not having any connection to FTX, Inc.

An Update on Blockfi.com: The FTX Group and the Barton Leverage Corruptcy in October 2011

The negative ripple effect across the industry started last night with Blockfi, another crypto services firm, freezing customer withdrawals as a result of the FTX problems. The price ofbtc dropped before recovering and is still under the $17,000 mark.

I was shocked to see the way things fell apart earlier this week. I want to be sure that I get it right when I write a complete post on the play by play.

Newly appointed CEO John J. Ray III is quoted saying, “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I wanted to make sure that we conduct this effort with diligence, thoroughness and transparency for everyone involved.

November 11th at 10:55AM is an update. Added bankruptcy filing, tweets from Sam Bankman-Fried, and noted that Sir Lewis Hamilton’s F1 car will not bear FTX branding at this weekend’s upcoming race.

A large portion of that total has since disappeared, they said. The source put the missing amount at more than $1 billion. The man said the gap was between $1 billion and $2 billion.

Two people with knowledge of the finances of FTX say that Bankman-Fried held a meeting in Nassau with several executives to figure out how much outside funding he would need to cover the shortfall.

They said the “backdoor” allowed Bankman-Fried to execute commands that could alter the company’s financial records without alerting other people, including external auditors. The set-up meant that there were no internal compliance issues when the $10 billion was moved to Alameda.

A source with knowledge of the inquiry told Reuters on Wednesday that the SEC is looking into FTX.com and its handling of customer funds. The department of justice and the Commodity futures trading commission are looking into it.

A Commentary on FTX CEO Emily Bankman-Fried: Blockchain, Transparency, and Democracy During the 2008 Financial Crisis

A former editor and policy advisor for The Wall Street Journal, Emily is currently the Executive Director of global content at CoinDesk and is a media, events, index, and data company. She is the author of “Now I Know Who I am a person who is from the internet underground. The opinions in this commentary are of her own. CNN has more opinion.

The answer is no one, because crypto shouldn’t need a savior. The whole purpose of the coin is to be transparent. Bankman-Fried’s rise and fall shows how far the industry has strayed from that ideal. Today’s crypto world is one of opaque entities run by larger-than-life personalities. There is perhaps no better example than FTX and its leader.

It wasn’t supposed to be this way. Bitcoin, the world’s first major cryptocurrency, came into the world on the heels of the 2008 financial crisis, which led to a deep disappointment in bankers and politicians. The idea was that this new system didn’t require you to trust anyone, in light of the distrust in financial institutions. Bitcoin transactions are recorded on a decentralized ledger known as a blockchain, which everyone can see and no bad actor should be able to fraudulently alter.

The risk of powerful centralized exchanges such as FTX, with people preferring to hold their own coins rather than storing them in an exchange, is something that has been pointed out for the past few years. Another option is to actually use blockchain technology to provide greater visibility, something that Bankman-Fried is now promising to do. He said his priority was to give as close to on-chain transparency as possible, so that people know what’s going on. In the case of FTX, of course, it’s probably too late.

Bankman-Fried said he takes full responsibility for his mistakes. In a long Twitter thread this week, he wrote: “I was CEO, which means that I was responsible for making sure that things went well. I, ultimately, should have been on top of everything. I failed in that. I am sorry.

Source: https://www.cnn.com/2022/11/12/opinions/crypto-white-knight-problem-sam-bankman-fried-ftx-parker/index.html

A Tweet from a Cryptophile: How Crypto is viewed by Social Media and its Twitter Followers? The Case of FTX

The cult of personality problem is not limited to crypto. We see it in social media as well, another supposedly leaderless and decentralized technology. Twitter is now subject to the whims of owner Elon Musk, the richest man in the world.

FTX General Counsel Ryne Miller said Saturday the company “initiated precautionary steps” on Friday and moved all its digital assets offline. The process was expedited Friday evening “to mitigate damage upon observing unauthorized transactions.”

The second most valuable currency, ether, is not faring much better. It was trading at about $1,230 on Monday, having sunk over 20% over the last week, CoinDesk data showed.

Changpeng Zhao is the owner of the biggest digital currency exchange. It’s obvious that we need some regulations, as things have gone crazy in the past week.

The man was speaking at a conference in Indonesia on Monday. He thought that it was an accurate analogy to compare the current tumult incryptocurrencies to the 2008 global financial crisis.

FTX moved its headquarters from Hong Kong to The Bahamas last year, with former CEO Sam Bankman-Fried hailing it as “one of the few places to set up a comprehensive framework for crypto” at the time.

Miller said that FTX was looking into the movement of funds from one currency to another in relation to the consolidation of FTX balances.

Over $400 million of ether was sent to the wrong account by Singapore-based Crypto.com, as scrutiny of big players in the world increases.

The 320,000 ETH was transferred to a corporate account at a different exchange than its offline wallet, according to Kris Marszalek, the company’s CEO.

“We have since strengthened our process and systems to better manage these internal transfers,” Marszalek tweeted Sunday. The native token has fallen in value over the course of the last 24 hours.

Under investigation of Marszalek’s bank as the world’s first trillionaire, and the implications for Alameda Research’s hedge fund

Marszalek’s firm has acted as a responsible, regulated player since inception and will soon prove all the naysayers wrong.

He said that it was normal for a bank to move user assets for investments. He said that an exchange that operates that way will probably go down. The industry had a role to play in protecting consumers.

Bankman-Fried and his company are under investigation by the Department of Justice and the Securities and Exchange Commission. The investigations likely center on the possibility that the firm may have used customers’ deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research, a violation of U.S. securities law.

“I care because retail investors suffer the most, and because too many people still wrongly associateCryptocurrencies with scammy ‘CRYPTO’ space,” stated Cory Klippsten, CEO of Swan Bitcoin, who raised concerns about FTX’s business model. While publicly enthusiastic about the subject, Klippsten has had doubts about other parts of the universe.

They said that they had a meeting with Bankman-Fried that was likely to be about the world’s first trillionaire. Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. After several more meetings, Sequoia decided to invest in the company.

I don’t know how to do that. SBF is a winner,” wrote Adam Fisher, a business journalist who wrote a profile of Bankman-Fried for the firm, referring to Bankman-Fried by his popular online moniker. The article was taken down from the website.

The First Year of Voyager Digital: Opening New Horizons for the Future of Motorsports and Pop Culture, and When Bill Clinton and Tom Brady Came Together

In a terse statement, the Ontario Teachers’ Pension Fund said, “Naturally, not all of the investments in this early-stage asset class perform to expectations.”

When Bankman-Fried bought up the assets of bankrupt crypto firm Voyager Digital for $1.4 billion this summer, it brought a sense of relief to Voyager account holders, whose assets has been frozen since its own failure. That rescue is being reconsidered.

His influence was starting to be felt in political and popular culture. Formula Racing and FTX bought prominent sports sponsorship and naming rights to a Miami arena. Bill Clinton was invited to speak at FTX conferences after donating millions to Democrats and promising to donate $1 billion for the election. Tom Brady invested in a company.